The most recent economic data available show that agriculture, forestry and fishing contributed 25.7 percent of Vanuatu's GDP in 1999. Although a further breakdown is not available from that year, data from 1995 shows that subsistence agriculture made up about a third of this sector, forestry and logging another third, and the rest made up of commercial agriculture, particularly copra production and beef production.
According to the Asian Development Bank, agriculture is more important to the Vanuatu economy than it is to any other Pacific economy, since it does not have the mineral and forestry resources of Papua New Guinea or Solomon Islands, the manufacturing base of Fiji, the marine resources of Micronesia, or the remittances of Polynesia. Throughout Vanuatu, subsistence agriculture is the mainstay of the village economy, since 80 percent of the population lives in villages. Food crops produced include taro, yams, kumara (sweet potato), bananas, coconut, and a great range of fruit and vegetables.
The most important agricultural product, in terms of cash production in the villages and in terms of export, is copra. This is the dried flesh of coconuts, produced by individual households and on large-scale plantations. Production of copra is highly variable year to year depending on weather conditions and world prices, although a general downward trend in production is noticeable since the early 1980s. One explanation is that the price in real terms paid to producers has declined over this period.
In recent decades there has been an attempt to diversify the rural economy away from coconuts to a variety of crops. Much effort went into the promotion of cocoa during the 1980s, but this was not very successful. By the late 1990s, cocoa exports were still only a small fraction of the value of exported coconut products. There has also been considerable promotion of coffee, but this too has not been very successful.
After copra, the second most important agricultural product by value is beef. Vanuatu is the only significant beef exporter in the Pacific, and this accounted for about 10 percent of all exports by value in the late 1990s. Cattle are often raised under coconut trees and serve both as a source of income and as a means of keeping plantations clear of weeds. The main export markets for beef have been Japan and the neighboring countries of Melanesia.
Two other crops that have increased in value recently are kava and squash. Kava, which is made into a drink that induces relaxation and mild euphoria, is a traditional crop that has recently been commercialized. The establishment of kava bars in the towns has accelerated since the 1980s, and in the 1990s kava was being exported around the world, where it can often be found in drugstores. The success of Tonga in securing a niche in the Japanese squash market caused other Pacific nations to look at this as a potential new crop. Vanuatu was one of the first to start squash production, but it is too early to determine whether this will be a successful case of agricultural diversification.
Logging in Vanuatu has never been on the scale seen in the neighboring countries of Solomon Islands or Papua New Guinea. Nevertheless, in 1997 and 1998, timber was the second most important export by value, after copra. The logging industry has maintained a relatively small but steady rate of production for many years, and involves both foreign companies and village-based sawmills. A ban on the exports of whole logs was implemented in 1989. Although temporarily lifted in 1993, the ban has been quite successful in adding value to the industry within the country by generating jobs in sawmilling and related activities.
Fish are an important food source in most parts of Vanuatu. However, commercial exploitation of fish is much less than in neighboring countries, considering the large area of ocean within Vanuatu's Exclusive Economic Zone (EEZ). Fishing fleets based in the country in the 1960s and 1970s ceased operations in the 1980s after considerable losses. Thus, fish are not a significant source of export income. Vanuatu does, however, receive some income from royalties paid by offshore fleets fishing within its EEZ, especially Taiwanese and American. The catches of these offshore fleets are landed mainly in Fiji and American Samoa, so relatively little employment is generated within Vanuatu from these activities.